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Review: ECRS Symposium „Reputation Capital“
by Kristin Köhler (www.communicationcontrolling.de)
The European Centre for Reputation Studies (ECRS) organized for the fouth time an international symposium on reputation studies on November 13, 2009.
Starting with an academic controversy, Mark Eisenegger, co-head of the Research Institute for the Public Sphere and Society (fög) at the University of Zurich, and Jonathan Silberstein-Loeb, research fellow at the Oxford University Centre for Corporate Reputation, debated in the morning session about the meaning of reputation and the importance of communication in establishing reputation.
Reputation would not just be communication, but sustainable long-term action of an organisation, so Eisenegger. He identifies three reputation dimensions of companies:
* functional (related to business performance)
* social (related to norms and values)
* and expressive reputation (related to the emotional appeal by various stakeholders).
Trust and reputation are close related to each other when it comes to reputation management: Reputation creates trust and trust presupposes that expectations are met. The expectations again occur in the three dimensions. Businesses better meet their stakeholders’ expectations to perform well, so his conclusion So far, so good, but how could reputation be managed at all? The current financial crisis shows a great loss of trust and corporate reputation, especially in the financial markets. To retain their scope of action, Eisenegger stated that companies could not reduce their reputation management to mere communication – however corporate realities must in any case be changed. The communicative environment and deficient perceptions would have been the cause of the past reputation problem, but the academic does not see communications to regain trust through honest, meaningful communication about a company’s real situation: On the one hand, communication could prove value when an enterprise is undervalued. But markets’ overvaluation could not be solved with expectation management - corporate reality must be changed in this case, so Eisenegger's conclusion. Being together with communication professionals his statement earned some critics from the participants being confident that strategic stakeholder management, issues tracking, measurement and a dialogic approach of communication could help regain reputation at all.
Silberstein-Loeb opened his speech with a different approach to the concept of reputation: the reputation of a company would be determined by testimonial belief and not stakeholders’ recognition of trustworthiness as it is Eisenegger’s academically opinion. His fundamental question: How does information moves into the market? So Silberstein-Loeb showed just one aspect of what influences reputation and what could be managed by communications: the perception of the media (as an opinion leader). The communicators could not influence stock prices and hard facts, the other reputational bases, so the research fellow from the Oxford University. Therefore, he does not understand Eisenegger’s three reputation dimensions. For Silberstein-Loeb, reputation is based on information; social norms and values are also reflected in a organisation’s reputation but are not really a matter of interest: reputation is not important for enlightened self-interest but to make money! In a world of solely commercial transactions reputation would not be necessary, but in reality all markets consist of social interactions. So reputation could facilitate market function and could be seen as a company’s social capital. But not in the same as Eisenegger’s meaning: a good reputation could limit a company strategically (e.g. Google’s market entry in China), so a good unreliable reputation could be as good as a good reliable reputation – it all has to do with what serves the company best. So for Silberstein-Loeb a company could have a good reputation also when its business model isn’t sustainable. Eisenegger stated that for a good reputation reality must come first: there would be no good reputation without a sustainable business model. So change management always comes before communication management.
The two perspectives provoked a lot of discussions among the audience as one could imagine. The next sessions have been less controversial giving more practical insights in the field of reputation risk measurment and issues management.
Measuring risks to reputation
Next, Frank Herkenhoff, head of media relations at Deutsche Börse, introduced his insights in reputation risk management. In his approach, he adapts risk management as a standard procedure in businesses to the corporate communications function. In general, risk management is in place to optimize the risk/return profile in business areas. A risk matrix could serve as a holistic instrument to identify upside and downside risks. The same approach could be used in reputation risk management. His matrix for corporate communications consists of two dimensions:
1. Is the risk effect- or cause-related?
2. Is the risk located externally or internally?
So you could identify four different types of risk for corporate communications. The causes of reputational risks lie not in the events themselves, but in the attentive structures of the mass media. So Herkenhoff tried to measure the possibility of events becoming news based on social sciences' framing and news value-theory. For identifying the risk potential two questions must be answered:
1. How do the reputational scenarios in your company fit into current media frames?
2. How intense are the news values in the reputational scenarios of your company?
The methodology for recording the probability of publication is arranged by him into four steps:
1. News factor analysis of the business scenarios
2. Analysis of frames at the level of the discourse product
3. Fitting analysis of the scenario and media frame
4. Risk scoring
In the end, the responsible for media relations has a reputation risk matrix on hand in which the risks are arranged as a risk portfolio in terms of likelihood of occurring and damage/benefit. In a next step, a strategy based on the risk management measures could be selected – according to traditional risk management risk diversification, avoidance, education, transfer, provisioning, or intensification.
Issues management and reputation
Jan Müller, Vice President of Issues and Strategy in the Corporate Communications department of EADS, presented his company's issues management system. Issues occur in two spheres of action, the company itself and its environment. Assessing the perception of the company by its stakeholders through opinion polling should identify tensions between expectations of stakeholders and the performance/behaviour of the company. Strengths and weaknesses could be seen and integrated in the communication strategy. The second dimension of the issues management process is the company’s environment. EADS tries to identify changes in corporate environment and their potential impacts on the top and bottom line. The key issues are gathered in four empirical steps:
1. a quantitative media analysis of the hot topics (present coverage of the established media)
2. qualitative media analysis of the emerging issues (online, blogs, opinion leaders)
3. external and
4. internal surveys on external/internal assessment, new topics, risks and opportunities.
The quantitative input consists of thousands of articles from 57 international newspapers in eleven categories on a monthly basis. The qualitative input comes from an open media set, is content driven and looks for “future signals”. The internal risk and opportunity survey includes the top management, enterprise risk management and opportunity thinkers; the external participants have to have an university degree, an annual income from + € 50,000 and an interest in politics and economy. The result of the elaborate analysis is a quarterly "Trend & Issue Analysis Brief" sent to companies “Top 50” including the key findings, an issue navigator, and the main analysis with five to seven elaborated topics. The in-depth analysis feeds the communications’ actions afterwards, but serves as a strategic business tool for the whole management as well – following Eisenegger’s understanding from a sustainable and broad reputation management approach.
More practical insights
Following this, communication managers from industry-leading companies shared case studies, including brand- and reputation-building campaigns by Coca-Cola Hellenic (presented by Jens Rupp, Sustainability Manager), insights from The Dow Chemical Company's reputation initiative "The Human Element" (presented by David B. Rockland, Ketchum) and Siemens AG (presented by Stefan Denig, responsible for Siemens’ issues management). In the last presentation of the day, Georg Kolb from Pleon’s social media unit showed the growing importance of social media networks and online communities for reputation management and the risks occurring from within. Social media monitoring has to be in integral part of issues management as well - the same also Müller explained in the EADS case. The analysis of the web 2.0 environments is crucial to identify new stakeholders and channels, current discussions or potential future topics of the company. So social media could be the best place to manage smaller pieces of the opinion market and with it improving reputation managment, reckoned Kolb.
In the closing workshop, participants were asked to choose a convenient reputation strategy for a specific company in a case study. The ECRS identifies four reputation strategies that could drive up a company’s reputation capital when fitting to the overall strategy and business model:
1. The Growth strategy has a focused profile based on careful analysis of reputation drivers and sector related issues.
2. The Hedge strategy focuses on aggressive target-group oriented communications.
3. The Value strategy contains of a consciously inward-looking reputation management that focuses on structures.
4. The Total return strategy simply concentrates on the quality of products an services with little attempt at communicative support.
For more information on ECRS’s investment philosophies for reputation capital compare the conference program.
Quelle: Kristin Köhler in communicationcontrolling.de
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